How the political instability has affected the brazilian banking system

How the political instability has affected the Brazilian banking system in terms of student loans?. As a result, this research aims to assess how the student loans have been affected by

How the political instability has affected the Brazilian banking system in terms of student loans?

Dissertation submitted in part fulfilment of the requirements

for the degree of MBA in Finance

at Dublin Business School

Rodrigo Dultra

Student Number: 10352929

Supervisor: Enda Murphy

Declaration

I, Rodrigo Dultra, declare that this research is my original work and that it has never been presented

to any institution or university for the award of Degree or Diploma In addition, I have referenced correctly all literature and sources used in this work and this this work is fully compliant with the Dublin Business School’s academic honesty policy

Signed:

Date: 10/05/2018

Acknowledgement

I would like to express my gratitude to all the people who made this dissertation possible and who have contributed to my entire academic development during my Masters in Business Administration with emphasis in Finance at Dublin Business School in this last academic year

Firstly, I would like also thank my entire family who has been encouraging and giving me all the support all the time, allowing me to finish not just my first degree but also this postgraduate one They have always been proud of my achievements under every circumstances

Secondly, I would like to thank my classmates that have worked and studied with me during all the modules as well as all the lectures that assisted me patiently throughout the course

Thirdly, thank to my supervisor Enda Murphy who has contributed with his support, motivation and advices throughout my dissertation supervision

Finally, thank to all my friends in Brazil and Ireland for the support and moments together

As a result, this research aims to assess how the student loans have been affected by the political instability in the country Accordingly, primary data and second data were collected in order to run the analysis on the theme The first one was collected from interviews and questionnaires while the second one from articles, books and academic articles to constitute the literature review Moreover, gaps were identified in the existing knowledge about the theme and were discussed and analysed

In addition, it has been taken an interpretivism + positivism, inductive, survey, mixed-methods, cross-sectional, qualitative + quantitative research design, which is explained in the research merhodology chapter Furthermore, this research contributes in the relation between political instability and student loans by assessing the Brazilian situation at the moment

Table of Contents

1 Introduction……… 07

2 Literature Review 12

2.1 Literature Introduction 12

2.2 Banking system x economics and politics 12

2.3 Banking loans x politics 13

2.4 Brazilian banking system 14

2.5 Student loans 15

2.6 Evolution of higher education funding 17

2.5 Brazilian government policy for students - FIES 18

2.8 Student loan policy in the US 20

2.9 Literature Conclusion 21

3 Methodology 23

3.1 Methodology Introduction 23

3.2 Research Design 24

3.2.1 Research Philosophy 24

3.2.2 Research Approach 25

3.2.3 Research Strategy 26

3.3 Research Choices 28

3.4 Time horizon 29

3.5 Techniques and procedures 29

3.5.1 Data Collection 29

3.5.2 Data Analysis 30

3.3 Sampling - Selecting Respondents 30

3.6 Research Ethics 31

3.7 Limitations of Methodology 32

4 Data Findings 33

4.1 Data from Interviews 33

4.2 Data from Questionnaires 36

5 Discussion 39

6 Conclusions 43

7 Self reflection 45

7.1 Introduction 47

7.2 Kolb style 47

7.3 Honey and Mumford 50

References 52

Appendices 58

List of Figures

Figure 1 – Brazil GDP from 2002 to 2016 Source: Nozaki, 2018 ……….……… ……07

Figure 2 – Growth rates in the Construction Industry Source: IBGE, 2017 ……… 08

Figure 3 – FIES Source: FIES, 2018 ……… ……09

Figure 4 – Biggest Brazilian banks Source: Central Bank, 2015 ……… 15

Figure 5 – Average earning earnings of college and high school graduate men Source: Avery and Turner, 2012……… 16

Figure 6 – Shift from grants to loans Source: Congressional Researh Service, 2007 ……….18

Figure 7 – Increase of the number of institutions and enrolments of tertiary education in Brazil from 1995 to 2014 Source: MEC 2016 ……….19

Figure 8 – Increase of universities price tuition in comparison to federal loans in the US from 2001 to 2012 Source: Lucca, Nadauld and Chen 2016 ……… … 21

Figure 9 – Research Onion Source: Saunders, 2007 ……… 23

Figure 10 – Action Research process Source: Saunders, 2007 ……… ….27

Figure 11 – Research choices Source: Saunders, 2007……….…28

Figure 12 – Research structure of this project Source: own, 2018 ……… 32

Figure 1 Student loans per type in Brazil Source: own, 2018 ……….……36

Figure 2 Students who managed to renew their visas Source: own, 2018 ……….36

Figure 3 Percentage of interest rate change Source: own, 2018 ……….…37

Figure 4 Opinion of students on the political moment Source: own, 2018 ……….……37

Figure 5 Connection between politics and loan changes according to students Source: own, 2018.38 Figure 6 Kolb learning style Source: Kolb, 1984 ……… … 46

Figure 7 Honey and Mumford learning style Source: Honey and Mumford, 1986 ……… …49

1 Introduction

During the last few years, Brazil has been passing through several political scandals such as the Lava Jato investigations with most of the politicians such as the president, senators and governors under investigation as well as construction companies proven to be involved such as Odebrecth, OAS, and Queiroz Galvao (Pamplona, 2017)

In the beginning of 2015, the former president Dilma Rouseff suffered an impeachment and Michel Temer took over her position However, he is also being investigated as well as most of the possible candidates for the next presidential elections on September 2018, which increases the political instability environment in the company For instance, Geraldo Alckmin and Jair Bolsonaro are the some of the main candidates according to media forecasts but both can be arrested even months before the elections (GLOBO, 2017) Moreover, Luiz Inacio da Silva, Lula, the favourite candidate was arrested in April 2018 after being convicted for corruption (O GLOBO, 2018)

In addition, due to the corruption investigation, some industries such as gas and petrol, retail and meat have been progressively affected For instance, the economy situation was worsened with scandal in huge companies such as the public organisation Petrobras, which holds the monopolism of petrol as well as the private meat provider Friboi, which was proved to fake the quality results of the meat standards (GLOBO, 2017) As a result, the Brazilian economy has been strongly affected by the political crisis with decrease on its GDP and consumerism as well as the growth of unemployment rates The graphics below illustrate how the Lava Jato operation, which started in 2014 has impacted the economy in Brazil, specifically the GDP (Nozaki, 2018)

Figure 8 – Brazil GDP from 2002 to 2016 Source: Nozaki, 2018

For instance, the gas and oil sector was responsible for roughly 13% of the GDP in Brazil and it was expected an investment package of U$ 220 billion for the period between 2014 and 2018 just in Petrobras However, due to the Lava Jato operation, the sector was responsible for half of the GDP decrease since 2014 and more than 20,000 suppliers were affected Another example of an industry

impacted by the instability is the civil construction which, according to the graphic below, has decreased up to 15% in comparison to past rates Approximately 100,000 employees have lost their jobs, which contributed to an increase in the sector unemployment rate of 72% in the period (Nozaki, 2018)

Figure 9 - Growth rates in Construction industry Source: IBGE, 2017

Moreover, another important sector for the Brazilian economic development is the Student sector In general, there are more than 70 million students in Brazil currently, which approximately 10% is represented by tertiary education It is divided in public and private institutions with a huge price difference between both which makes it necessary for many people to request student loans in order

to make it possible to finish their degrees (Investinbrazil, 2017) However, what it has not been addressed yet is the effects of the political instability on the provision of these loans

Furthermore, the address of the issue is not just important for the students but also to assess whether such an important aspect of the economy has fluctuated during the crisis According to Zanuja Branco (2012), Brazil, India and China were part of the five economies that grew the most in the last decade and they were also some of the nations that invested the most in tertiary education This is a very relevant aspect for the economy because it can improve historical issues that disturb this country development such as unskilled labour and low production rates (Branco, 2012)

In addition, a student loan can be obtained in private and public banks It presents simple repayment methods, low interest rates and it covers all the living needs for the student such as rent and food The most popular and relevant student loan system in Brazil is run by the Fund of Student Financing (FIES), a government body created in 1976 to select students in order to provide them loans for private institutions and which has a budget of R$ 13 billion per year and 26% of the total current students in university, which shows the relevancy and magnitude of the body Its popularity is due to

a much lower rate, 3.4% per year, in comparison to private institutions that present a rate of roughly 7% and that it is the reason for the vast majority of student loans been obtained in the public sector (MEC, 2017)

Figure 10: FIES Source: FIES (2018)

Moreover, according to the OECD (2011), people who have tertiary education in Brazil earns 2.5 time more than people who do not, which represents the biggest difference in a list of 30 countries of the survey conducted by the organization Accordingly, it also illustrates the social inequality presented in the country and how important is for students to have a degree in Brazil (OECD, 2011)

The reason for that is for being a much updated topic since the political instability only started in February of 2015, it is the first time that such uncertainty has hit the country and for not having the students angle in any research done so far In this way, this paper would contribute to the literature

on the relationship between banking and politics with the example of the current Brazilian situation

with its student loans

Accordingly, some sub-research questions have to be answered in order to assess it

Questions for bankers:

How student loans have performed?

How student loans have been impacted by the political scandals?

Have student loans been diminished in terms of quantity since?

Has the student loan budget suffered any change since?

In order to know if the student loans have been suffered any effect or not from the political situation

it is going to be asked the two parts that are involved the most: bankers and students The questions will be answered through individual semi-structured interviews with the first ones and questionnaires with the second from different backgrounds as explained in another section further

Question for students:

Has your student loan suffered any change since the political instability started in February 2015?

The hypothesis is that student loans suffered the effects of the political instability In addition, the variable that is intended to measure with this question is the student loan in order to compare the two possible answers for it: yes or no In this way, it would be able to get a sense if students are suffering from the political instability or not

As a result, this research will be extremely important for the public involved to be aware of the current situation such as students who depend on loans to finish their degrees at university as well as for bankers to assess its stability on the loans department under such negative macro conditions The aim is to provide a comprehensive review of what has happened so far with student loans during the crisis, to assess to what extent they are susceptible to political uncertainty in Brazil and to provide a useful data for banks to take into account for their strategy in the future In addition, it can be useful for any bank and government in a country that may present a similar situation in the future in terms

of stability in politics

Aims:

Discover if banks have had changes in their student loan performance

Assess to which extent political instability and student loans are linked

Assess if student are having any issue regarding the obtaining and/or modification of their loans

Provide a contribution to the literature on the relationship between politics and loans

In chapter 3 is explained the research methodology carried out in this research All the options of every research methods are explained as well as the ones chosen Every choice is justified why it is the most appropriate one to the topic instead of the others

In chapter 4 is presented and illustrated reasonably the findings of this research for both the questionnaires and the interviews

In chapter 5 is explained the review of this work, including the interpretation of the results, the research question answer, the implications of the findings and the contribution of this research to the area

In chapter 6 is showed the conclusions from the analysis as well the summary of the findings and the explanation of how they clarified the general issues raised on chapter 1

2 Literature Review

According to Saunders (2007, p 32), Literature review is a detailed overview of the relevant literature regarding the topic of a dissertation Accordingly, the main related themes to the topic are discussed and critically evaluated below

2.1 Literature Introduction

The aim of this chapter is to analyse academic existing themes which are relevant and related to the topic of this proposal and to assess what is already known about the subject of this dissertation In addition, a better comprehension of what is already written by researchers will be used to support the execution of the researched proposed Firstly, it is going to be addressed banking system x economic and politics to assess the relevant material about the relation between the sustainability of a banking system and the political and economic situation of a country, to what extent they are linked In this way, it can provide a some insights of previous similar examples to assess if the political instability in Brazil has affected its student loans Secondly, banking loans x politics, to understand the effects of politics on loans and, therefore, provide another benchmark for the dissertation.Thirdly, the Brazilian banking system literature will be reviewed in order to obtain a greater understanding of how its structure is and how it works

Fourthly, the literature about student loans will be assessed since the theme of this project is about the current situation of the ones in Brazil and it will provide a general knowledge In sequence, the evolution of higher education funding in order to understand the changes that have been happening

in the last decades in the world in order to provide a context on the evolution of the theme Furthermore, the literature on the Brazilian government policy for student, the FIES, will be analysed

in order to present a better comprehension of the subject since it is the student loan type that the Brazilian governments provides for its students so that it is extremely important to understand it for this project At last, the student loan policy in the United States in order to provide another country loan system to compare with the Brazilian one It was chosen mainly academic journals that are update as possible due to their quality and relevancy to the theme

As a result, the analysis of the six themes above combined with the primary research will seek to answer the research question of this dissertation

2.2 Banking system x economics and politics

According to Hartmann, Straetmans and Vries (2005), the banking sector is an important aspect for the stability of any economy of a country Moreover, bank credit is proven to be an essential factor for the financing of investment and economy growth in different types of economy In addition, the

assessment of a banking system stability can be an essential interest of study for central banks and supervisory authorities in order to preserve financial and monetary stability (Hartmann, Straetmans and Vries, 2005) For instance, transparency and bank system risk issues demonstrated positive and negative results on the economy in the US and European countries over the last decade Furthermore, Pradhan, Arvin and Nair (2017) demonstrated through the Granger causality test, a statistical hypotheses test, which showed that in the long-term the banking sector has been strongly linked to the economic growth in the G-20 countries However, it is important to highlight that the results differed from country to country depending on its development stage (Pradhan, Arvin and Nair, 2017)

Furthermore, Stijn Claessens, Swati Ghosh, and Roxana Mihet (2013), analysed how macro-prudential policies can limit bank vulnerabilities According to them, policies need to be properly chosen, calibrated and adjusted by country circumstances and the ones aimed at borrowers are moderately effective in reducing banking risks and, consequently, crisis For instance, Kenourgios and Samitas (2007) associated the economic growth of Poland last decade to its finance sector by concluding that credit to the private sector was of the main aspects of the long-term growth

Another evidence of the strong link between politics and banks was shown recently by Houston et al

(2014), demonstrating that the cost of bank loans is much lower for companies that have members of its boards of directors linked somehow with politicians It was possible to conclude it after the analysis of a hand-collected data set of the political connection of 50 banks in the US from 2003 to

2008 (Houston et al, 2014) As a result, it shows that is not just the bank sector that influences the economy and politics but also the other way round

On the other hand, both studies focus more on avoiding politic and economic problems rather than handling existing ones In addition, there is no mention on the existing literature of student loans but just general credit rates For both reasons, these studies are not the same as this research proposes including the Brazilian current situation and the student loans However, it provides relevant insight of how prudential policies tailored for a country can be beneficial for its situation, which can be useful for this project since it primarily shows a certain relation between politics and banking system and, therefore, would help to answer the research question

2.3 Banking loans x politics

Paola Sapienza (2004) demonstrated how the behaviour of state-owned banks, when it comes to lending, is affected by the election results of the party affiliated with a certain bank For instance, the interest increase or decrease depending on how strong is a political party in the area where a bank is borrowing Furthermore, there is also a strong relation between the interest rates of state-owned and private banks on corporate loans for similar firms, showing that the government can interfere directly

according to its interests (Sapienza, 2004) In addition, according to Jimenez et al (2014), the amount

of granting loans can change quickly according to interest rates modifications For instance, the author showed that low capitalized banks can commit larger amount of loans with less requirements, demonstrating how monetary policy affects bank loans

In addition, the administration of loans for students is considered to be one of the most complicated ones for banks since it is hard to ensure its payment (Hopper, 2015) Furthermore, Looney and Yannelis (2015) stated that the cause number one for a decrease on student loans would be loan defaults, which are mainly due to a weak educational background Other issues such as income verification, lack of commitment by the borrower and moral hazard are some of the most popular problems in the US when it comes to student loans, which contrasts to the general idea that monetary policies are the main one for student loan decrease (Lochner and Naranjo, 2016)

Moreover, Micco, Panizza and Yanez (2007), assessed the relationship between bank ownership and bank performance, concluding that banks present different performances in developed countries and the developing ones Accordingly, they react differently to government policies, especially when it comes to the provision of loans due to its interest rates (Micco, Panizza and Yanez, 2007)

In conclusion, it is a fact that bank loans can be affected directly by the government through its monetary policy However, it is not the only aspect that can disturb loans, especially when it comes to the ones for students As explained above, several causes have impacted student loans such as loan default and income verification for instance in the US

2.4 Brazilian banking system

According to Maia (1999), the banking restructuring in Brazil after the Plano Real, which was implemented in 1994, is the biggest change in the Brazilian banking system in the last century and it drove the industry after that The new Brazilian banking structure presents public banks (both state and federal), the entrance of foreign competitors and the private banks This modification was designed by the law number 4595, in 31 of December, called ‘The Banking Reform Law’ Moreover, Barros and Wanke (2014) demonstrated how Brazilian banks have reacted differently to such big changes like the Plano Real, which resulted in the end of the currency hyperinflation that was presented in the country for more than a decade Furthermore, most of the changes enhanced the bank service provision in the country that became much more efficient for the public However, the supervision of the Central Bank of Brazil, which is linked to the Ministry of Finance, is still confusing with plenty of bureaucracy (Barros and Wanke, 2014)

In addition, according to the evaluation of Pereira and Saito (2015), which was done by using supervision data on credit rating and capital buffer of the Central Bank in Brazil, the author concluded that the central bank play a major role in the market but its effectiveness is not satisfactory due to complex rules, lack of transparency, inability to supervise and bureaucracy Moreover, Tabak, Laiz and Daniel Cajueiro, (2013) stated that the banking structure nowadays in Brazil is well established with large, well-capitalized and liquid banks that are still reacting differently to the effects of monetary policy measures in this country Furthermore, there are five main banks, which run approximately 70% of assets and loans based on the Central Bank data: Banco do Brasil, Itau, Santander, Caixa and Bradesco These biggest banks have branches all over the country but the international operations are usually centralized its headquarters in Brasilia, Rio de Janeiro or Sao Paulo In addition, the impact of monetary policy is different across state-owned, foreign and private domestic banks; which is proved by a number of evidences for that, including the bank balance sheets Moreover, according to the Moody evaluation, the Brazilian banking system is regarded as to stable from negative (Tabak, Laiz and Cajueiro, 2013) However, the examples are more focused on general activities such as assets and debts; rather than student loans

Figure 11 Biggest Brazilian banks Source: Central Bank, 2015

As a result, it is possible to conclude that despite the fact that the Brazilian banking structure is well established, the banks do not present a homogeneous reaction across the 25 different states in the country, to the monetary policies done by the Central bank, which is still inefficient when it comes to supervise the market A lot of progress has been made since the Plano Real in 1994 but there are still some issues to be solved

2.5 Student loans

According to Dowd and Cury (2006), student loans are a type of loan to support students in accessing and finishing their post-secondary course It also includes other costs such as tuition fee, books and any other kind off supply for the study like the living costs Currently, student loans are in operation approximately seventy countries in the world and many of them can vary due to their own regulation

and laws (Dowd and Cury, 2006) Moreover they usually take advantage of government subsidies, present lower interest rates and administrative costs and payment default risks In addition, they can

be obtained in banks and specialized agencies; and the main difference between student loans and scholarship is that the first one must be repaid (Shen and Zimerman, 2009) According to Avery and Turner (2012), the total student loans amount has more than quadruplicated since 1990 due to the importance that a degree can have on the financial life of people In addition, the authors suggested that enrolling in college is probably the best investment nowadays than some decades ago for young people For instance, the graphic below illustrates how the average earnings of a person with a degree in his lifetime have become much higher than one that studied just until high school over the last five decades in the United States

Figure 12 Average earning earnings of college and high school graduate men in USA Source: Avery and Turner 2012

On the other hand, negative results obtained during the degree can represent higher levels of borrowing and, consequently, an increase in the odds of student default This is the biggest risk and concern for governments since its statistics has also increased over the last two decades (Avery and Turner, 2012) Moreover, students that complete their degrees but are just able to reach the bottom

of wage distribution may present a salary that does not compensate the investment made This is considered one of the most important concerns for students before obtaining a loan Accordingly, Looney and Yannelis (2015) showed that the duration of the course is also related to the default since

students of 2-year institutions have presented a bigger rate of default in comparison to 4-year institutions Moreover, the vast majority of loans student loans are in the second group, presenting approximately the double of 2-year institution students (Looney and Yannelis, 2015)

In contrast, Dowd and Coury (2006) presented a study saying that is not possible to link college attainment to levels of student loans, but to uncertainty of degree completion and indebtedness However, the authors stated that further testing was necessary to attest it

In addition, the repayment ratio across the dozens of countries that present student loans is roughly 40% or even less in average This is considered a great percentage in comparison to average loans since they have a much higher percentage of repayment However, the study of Shen and Zimerman (2009) shows that this result can significantly vary from nation to nation In the case of Brazil, the most popular student loan is the FIES, a loan granted by the government with the lowest interest rate

of the market In order to grant it, the student has to pass through a process to obtaining otherwise

he can pursue other options with private banks which do not have the same great conditions of FIES

As a result, 73% of the total student lending in Brazil is under the FIES program, which represented a total amount of 32.2 billion of reais in 2016 Apart from FIES, just a few other options are offered by private banks such as the Pra Valer of Itau (Soares and Zanelatto, 2016)

In conclusion, the studies have presented a broad knowledge of what is known worldwide about student loans as well as its relevant numbers For instance, the importance of a degree, the relation with attainment and levels of repayment However, expect for the concern regarding student default, they do not link the theme with politics nor its vulnerability with times of crisis

2.6 Evolution of higher education funding

Bray (1986) stated that especially in the 1970s and the 1980s due to economic circumstances, a lot of governments around the world had to reassess the way of spending costs in education In addition, student loans for higher education was a popular measure to adopt but it worked differently around the globe However, they present some differences and one similarity as Paul Pierson (2001) stressed that they vary across regime types; they all prioritize cost containment as well

Moreover, according to Johnstone and Marcucci (2007), there have been dramatic changes regarding the financing of higher education in the end of the 20th and in the beginning of the 21st centuries Accordingly, the main reasons for the transformation are college costs increase, massification of tertiary education and the dependence of inadequate governmental revenue In addition to the amount, there has been also a change on the type of financing: a shift from grants to loans (Simmons, 2008)

Figure 13 Shift from grants to loans Source: Congressional Researh Service, 2007

For instance, the student loan policy launched in 1969 in Hong Kong is a case of success, starting with small grants to cover expenses in 1969 to loans to cover everything for students to attend universities in the United Kingdom

On the other hand, according to a study made by Akers and Chingos (2014), through the collection of data of the past two decades of the Survey of Consumer Finances (SCF) in America, there is not likely

to have a crisis on student loans despite the increase of both debt levels and tuition fees

In conclusion, it is possible to see the evolution of student loan policies occurring in the world in the last decades as well as positive examples such as Hong Kong and the United States In addition, the odd of not having a crisis in the USA despite price and debts increases However, it is still not possible

to link to the Brazilian case and its crisis

2.5 Brazilian government policy for students - FIES

According to Soares and Zanelatto (2016), the Financing Fund for Students (FIES) is a Brazilian government policy that is democratizing access to higher education in Brazil It grants student loans for people who could not pass in public universities and cannot afford to study in a private college (Soares and Zanelatto, 2016) In order to obtain it, the student has to meet some requirements such

as the maximum family revenue per month and a minimum score in high school (Aprile and Barone, 2009) Moreover, the program was created in 1999 offering an interest rate of 6.5% per year, which was changed in 2010 to 3.5% per year Furthermore, it represents an average of R$ 13 billion of student lending per year, the average of total loan is R$ 220,000 (that is usually given to the student

on monthly transactions) and the duration of payment is related to the triple of the course duration (if

it is a 5-year degree, it can be paid in 15 years for example) However, under the FIES conditions, either the loan is just granted for a year or for the entire course If it is annual, the students have to

apply for a yearly renew until the end of the course The average monthly payment is around 1,200 reais per year with law being the most popular degree with 94,000 new contracts in 2016 (Chaves and Amaral, 2016)

In addition, Oliveira and Carnielli (2010) explained how FIES contributed to the expansion in higher education in Brazil according to the opinion of several people involved in institutions It increased the odds for people from lower classes to stay in college and finish their degrees As a result, opportunities are more equal between poor and rich students In addition, a considerable part of the people involved in the study complaints that the program rules could be clearer, which causes a lot of inappropriate critics by the press due to a misunderstanding of the program

Moreover, Carvalho (2016) highlighted that human diversity and different socio-cultural realities were the causes that lead the government to create the program The aim was to provide social inclusion

as well as intellectual training opportunity for those who suffered from the historical inequality in the country

Accordingly, Vera Chaves and Nelson Amaral (2016) analysed the expansion on the educational policy occurred in Brazil for higher education between 2003 and 2014 Through a quantitative analyse it possible to conclude that it has contributed for financial gains by private institutions, increasing significantly its number of students enrolled reaching 74% of the country On the other hand, institutions that provide research and extension were not equally helped financially On the figure below it is possible to see the evolution of the number of institutions and enrolments in private and public universities over the last three Brazilian governments The number of universities tripled and the vast majority of new institutions founded are private, which showns the importance of the acquisition of loan by students (Chaves and Amaral, 2016)

Figure 14 Increase of the number of institutions and enrolments of tertiary education in Brazil from 1995 to 2014 Source: MEC 2016

As a result, the studies have different focuses regarding the program itself in terms of its features, expansion or social importance However, they not take into account the current background with the political issues as well as the policy immunity to them On the other hand, they provide a great understanding of the program and insights that can be helpful on answering the research question while conduction the primary research

2.8 Student loan policy in the US

According to Avery and Turner (2012), student loans in the US can be obtained through two different forms: federal loans and private student loans The first one is given by the federal government while the second one is by institutions like Stafford and Perkins Although federal loans are cheaper than the private ones, they are still generating billions of profit for the government since their interest amounts are higher than their costs In addition, there are two types of federal loans: subsidized or unsubsidized loans The difference is that the interest of the first one is paid by the government and

it is required from the student to demonstrate financial need while in the second option, the interest

is paid by the student and there is no financial need requirement (Baum and Jhonson, 2015)

Furthermore, student loans represent nowadays $ 1.4 trillion spread by 43 million students that receive in average an amount of $30,000 for the entire course Moreover, student loans in the U.S is regulated by the Higher Education Act of 1965 but since there was a change made in 2005 on bankruptcy laws, it is not common having losses with student loans since they are not allowed to be discharged in bankruptcy (Simkovic, 2013) In addition, student loans are vital for the U.S higher education access since roughly 60% out of the 20 million people who attend college every year need some kind of financial assistance for their studies

On the other hand, a research made by Lucca, Nadauld and Chen (2016) suggests that the current higher college costs are related to the increase of student loans in America Accordingly, the graphic below (see figure 5) shows that the number of student loans and the price of tuition fees have been increasing simultaneously from 2001 to 2012

Figure 15 Increase of universities price tuition in comparison to federal loans in the US from 2001 to 2012 Source: Lucca, Nadauld and Chen 2016

In addition, the graphic also shows that the financial crisis of 2008 did not strongly impact the provision of student loans (Lucca, Nadauld and Chen, 2016)

Furthermore, a study made by Baum and Jhonson (2015), showed that national averages in the US are not strongly reliable since it hides huge differences across the country Each state has its own rules, what causes a difference in the amount of loans provision

As a result, the studies available on student loans in the United States of America cover relevant aspects such as its structure and its increase over the last few decades, which is a relevant data to compare with the Brazilian structure despite some huge differences, including the total due amount, the number of loans and the fact that in the US the loans is just for the entire course In addition, it also stated that the financial crisis of 2008 did not impact the increase of student loans, which will serve as a reference of the relation between crisis and student loans for this dissertation

2.9 Literature Conclusion

The literature review above shows the existing and relevant material about banking system x economics and politics, Brazilian banking system and banking loans x politics, student loans, Brazilian student loan policy, evolution of tertiary education loans and student loans in the US It is a comprehensive material with different addresses and perspectives but there is still no focus showing

how these subjects can be related to the Brazilian situation right now The political instability is unique in the history of the country, which makes this a very particular situation Moreover, past studies are mainly focused in a general perspective, with examples all over the world when it comes

to the relation of banking system and loans with politics and economics What is missing from past researches is a direct association to the Brazilian situation at the moment Furthermore, the studies regarding politics are more related to a response to the economic situation worldwide with raise in prices and tuition fees being the only modification identified so far

In addition, the studies on the Brazilian banking structure have shown that banks respond differently

to the Central Bank policies but there is still no study taking into consideration their reaction on the student loans to the crisis

As a result, the research proposed is going to add the students perspective on such updated topic that there is not much written about since the investigation is not finished yet so that its effects on the banking system In addition, it will serve as an example of how political instability as student loans are linked

3 Methodology

3.1 Methodology Introduction

In this chapter it will be explained with details how is going to be carried out the methodology of the primary research for the research proposed According to Kothari (2004), research mean a search for knowledge and it can be defined as a scientific and systematic search for pertinent information on a specific topic Accordingly, Cameron and Price (2009) defined business research method is “a systematic attempt at collecting and interpreting data and evidence in order to inform thinking, decisions and actions in relation to an issue of interest to an organisation and its stakeholders”

In addition, it will be followed the research onion (see figure below), which describes the layers of the research process and it demonstrates how is going to be the research design including its philosophy, approach and strategy; the sampling, data collection, data analysis, ethics issues that may arise as well as the limitations of the methodology It starts from the macro to the micro with the outer layers focus on thinking about research philosophies and approaches, the central ones reflect the need of research strategies and choices adoption; while in the centre there are the data collection and analysis as the main concern It illustrates progressively all the stages that will be covered in order to develop the research strategy (Saunders, 2007)

Figure 16 Research Onion Source: Sanders, 2007

3.2 Research Design

3.2.1 Research Philosophy

According to Saunders, Lewis and Thornhill (2007, p 104), a research philosophy is an “overall term that relates to the development of knowledge and the nature of that knowledge in relation to research” In addition, it also considers the ways in which data should be collected, analysed and used Furthermore, it contains some of the personal assumption of this author and how he views the world and there is no philosophy better than another, just the most suitable for each case Moreover, the main strands of research philosophy are positivism, interpretivism and realism

Firstly, Positivism is the research philosophy that adopts highly structured methods to facilitate the replication, which results in law-like generalisations It derives from natural science and it presumes that the social world exists objectively and externally In addition, it focuses on facts and it considers knowledge valid only if it is based on experience and observations of the external reality Moreover, it uses quantitative methods such as surveys, experiments and statistical analysis As a result, it usually lends to predictable results (Saunders, 2007)

Secondly, Interpretivism is the research philosophy that focuses on the comprehension of different human behaviours in their roles as social actors In another words, it is the opposite of positivism since knowledge is constantly reconstructed through different experiences, what leads to many different possibilities of interpretations Moreover, it considers different realities based on the different points of view of the people involved so that the knowledge must be interpreted in the context of the researcher academic experience Furthermore, it is inductive and theory building As a result, it focuses on understanding the interpretations and meanings of social actors in order to understand their perspective, what makes this philosophy a very contextual one (Hatch and Cunliffe, 2006)

Thirdly, Realism is a research philosophy that stresses that objects exist independently of our knowledge of their existence It is originated from critiques of positivism and interpretivism, which are considered too deterministic and too contextual respectively Accordingly, it claims that real structure exists and it is independent of human consciousness and that knowledge is socially created Although

it is a different philosophy, it presents some similarities with the other two For instance, realism is in accordance to interpretivist positions in the sense that it considers natural and social science are different, and that social reality is pre-interpreted On the other hand, it is in line with positivist thinking in the sense that it also follows the idea that science has to be empirically-based, rational and objective (Cameron and Price, 2009)

As a result, the philosophy adopted in this study is going to be a mix of interpretivism and

positivism The first one because it recognises that business people are different and interpret

business situations differently; is very contextual so that it will take into consideration the Brazilian situation at the moment, which is very particular and there is no previous similar example in the world as showed in the literature review In addition it is perfectly suitable for the topic because different banks could have had a different reaction to the instability, which will be examined on the interviews Moreover, the positivism will be utilized for the quantitative data collected and it suits the topic because it will be concerned with the facts on the student questionnaires results that will confirm whether their student loans were affected by the crisis or not Furthermore, Realism was not chosen since it is a philosophy that requires an understanding of the deeper structures and relations which are not easily observable, which would be extremely time consuming for this study and, therefore, inappropriate for this dissertation (Saunders, Lewis and Thornhill, 2007)

Secondly, an inductive approach is the one that regards the development of a theory as a result of analysing data already collected It aims to generate a new theory based on the data collected and observations done by the researcher It starts with research questions, it is usually associated to qualitative data and it is concerned with the context with the events In contrast to the deductive approach, the conclusion not always follow the premises and it is not necessarily true (Cameron and Price, 2009)

As a result, the approach chosen for this research is going to be inductive since there is no specific

theory to assess how the new political instability has affected the student loans in Brazil In addition,

it suits the topic since it started with a research question and the result will be generated from the analysis of the data collected Moreover, only after the completion of the analysis of the data is that the research question output will be produced Furthermore, due to the nature of the approach, a

better understanding of the Brazilian situation is necessary in the beginning of the research in order

to facilitate it since the study will be carried out by an inexperienced researcher and, therefore, leading to confusion during the research (Saunders, Lewis and Thornhill, 2007)

3.2.3 Research Strategy

The third step of the research onion is the research strategy, which is how the researcher intends to execute the research In addition, some strategies are better used with a quantitative approach while others with a qualitative approach; and the aim of choosing the most appropriated strategy is to enable the research to answer the research question and achieve the research objectives In addition, there are several types including experiment, survey, case study, grounded theory and ethnography, which are explained below (Hatch and Cunliffe, 2006)

Firstly, the experiment strategy, which is usually associated to the quantitative approach and it is the classical type of research originated from the natural sciences It studies casual links between one variable, the independent one, and the change on another variable, the dependent one Moreover, it emphasizes the measurement precision so that the variables must be measured Furthermore, it is necessary a lot of details in order to describe the experiment For instance, it can be useful for marketing purposes when testing if an advertisement, the independent variable, grows a specific product sale, the dependent variable (Cameron and Price, 2009)

Secondly, the survey strategy, which can be associated with both of the approaches, the quantitative and the qualitative one; and it involves the structured collection of data from a considerable population In addition, it is useful for measurement processes that involve questioning people about something Accordingly, it can be used questionnaires for quantitative approach and interviews for qualitative approaches One possible limitation is that the data collected might not be as detailed as other types of research strategy On the other hand, it is the most popular strategy when it comes to gathering data from a large number of people For instance, it is suitable if the intention of the researcher is to discover what is the percentage of people who has a particular opinion about an issue (Saunders, 2007)

Thirdly, the case study strategy, which also can be associated with both methods, the quantitative and qualitative approach However, differently from the survey strategy the focus more on straight forward question such as ‘who’, ‘what’ or ‘where’; the case study strategy is focused on the ‘why’ Accordingly, it is focused on the explanation of events, an in-depth exploration and investigation of a particular phenomenon in a particular context However, and issue that some people think about this strategy is that one case or a small number of them might not be enough and precise for the findings, as well as generalising from an individual activity can represent a limitation for the research Moreover, it is appropriate for obtaining a detailed understanding of the context involving the

research For instance, it can be a positive strategy when it comes to understanding why managers make a certain type of decision under specific circumstances (Saunders, 2007)

Fourthly, the grounded theory strategy, which is usually associated with the qualitative approach It is also usually linked with the inductive approach since it is a theory development that is generated by observations and discussions on the data collected The process usually starts with observations, followed by analysis of evidences and leading to an emergent theory that is created However, an issue of this strategy for new researchers is that it requires strong thinking, analysing and reflections skills (Saunders, 2007)

Fifthly, the ethnography strategy, which is usually associated with qualitative approach It is concerned with the comprehension or interpretation of an issue from the respondent perspective The biggest issue of this strategy is that it demands a huge amount of time in order to make it possible for the researcher to immerse himself in the context of the participant (Hatch and Cunliffe, 2006)

Sixthly, the action research strategy, which is concerned with the management and involvement between researchers and practitioners In contrast with other strategies such as the case study, the role of the researcher in this one is much more active by making experiments and checking the results in an organization or a project It follows the three cycles (see figure 9 below), which continue until a satisfactory outcome is reached On the other hand, its disadvantage is that it is necessary an experienced research to run it well by it is necessary to take responsibilities for the interventions (Saunders, 2007)

Figure 17 Action Research process Source: Saunders, 2007

In conclusion, the type of strategy adopted for this research out of the options explained above will

be the survey approach, with a mix of quantitative and qualitative research to be conducted The

reason for it is that the first one, qualitative research, aims to get deep information through

interviews to understand bankers behaviour towards student loans, if it has changed, if it was influenced by the political and economic moment of the country at the moment, why and how of the decision making and to gain an understanding of reasons and opinions from employees The second one, the quantitative research will be carried out through questionnaires to examine the phenomenon through numerical observations and statistical analysis in order to know a reasonable proportion of students who have been affected (Saunders, 2016) The aim is to quantify the problem and generate numerical data that can be transformed in statistic to analyse through the number of students whose loans were affected or not Moreover, it accelerates the data collection, it has low cost and it is extremely objective As a result, it will be given questionnaires to the respondents and it will be conducted individual interviews with a few people that work within the industry as explained further Furthermore, the survey approach is more appropriate for this project than the other ones, as mentioned in each definition above, due to several disadvantages with longer time and need of research experience being the main ones

3.3 Research Choices

The research choice is about the type of method that is going to be chosen for the collection of data

It includes the mono method, the mixed method and the multi method The first one means that just one method of research approach is going to be used in the study whereas the second one means that the researcher is going to use more than just one data collection method The third, and final one, means that it is going to be adopted a wider (Cameron and Price, 2009)

Figure 18 Research choices Source: Saunders, 2007

In addition, what differs the mixed method from the multi method is that one single dataset is going

to be created in the first one while the second one produces a different data for each method and then analysed through different techniques The methods are related to the quantitative and qualitative methods (Saunders, 2007)

As a result, the research choice of this dissertation is going to be a mixed-method choice It is more

suitable for this study since a combination of different approaches can overcome the disadvantages of one single method that may not cover all the necessary points (Saunders, 2007) The quantitative will

be for the questionnaires and qualitative for the interviews

3.4 Time horizon

Firstly, the cross-sectional, which aims to take a part of a situation in a certain period of time Moreover, it is recommended for masters since is not so time demanding Secondly, the longitudinal, which demands a huge amount of time in order to perform it In addition, it can have duration of year and it is useful for researches such as staged experiments or multiple interventions (Saunders, 2007)

As a result, the time horizon chosen is the cross-sectional since it is the most appropriate for term researches due to the short duration of this study

short-3.5 Techniques and procedures

3.5.1 Data Collection

In order to run the proposed data collection, it will be conducted a concurrent mixed methods

research In this way, qualitative and quantitative research will be done in a single phase of

data collection and a single phase of data analysis As a result, both sets of results can be collected at the same time, which would accelerate the process since time is also an issue in this research In addition, it contrasts with the other methods that would require more than one phase of collection like the sequential method that makes an obligation to collect qualitative and quantitative data in two different phases, one after the other in a logical sequence Moreover, the data will be collected in two different ways: semi-structured interviews and questionnaires

The first one will be with bank employees, a face-to-face interview in order to know their opinion about how the bank has been affected during this instability period when it comes to loans In addition, it was chosen individual semi-structured interviews because it is possible to engage in a formal interview, they have a framework of themes that need to be covered and they can allow new ideas to come while the interviewee speaks and think that is appropriate to add In addition, the researcher will not have more than one chance to do the interview so this structure is appropriate also because it allows including new information if necessary (Saunders, 2016) It will be implemented in this way, face to face, because it is important to establish personal contact within this context The reasons for that is the more likelihood from employees to agree with an interview rather than answering a questionnaire, especially when the topic is relevant to their work, the opportunity to reflect on events without the need of writing it down and the personal assurance for the interviews

about the way that the data will be used and to control the responses since a manger could easily pass to question to somebody else in the department to answer (Saunders, 2016) As a result, they will be contacted by e-mail firstly and then schedule a physical visit in their branch to start the interview

The second one will be questionnaires with students who have current loans at UNIFACS, the biggest private university, and UFBA, the biggest public university, in order to get their perspective from the crisis It was chosen to delivery face-to-face the questionnaires for the students in order to avoid their reluctance on answering it The reason for that is because they can be reluctant to complete the questionnaire if it is delivered in another way rather than face to face because it may be not safe to provide confident information for a person that they never met, they may not trust the way that the information will be used, the time that they would spend on completing the questionnaire and if they

do not understand properly what is being asked (Saunders, 2016)

3.5.2 Data Analysis

In order to transform the raw data into proper information to be used, the data analysis will be conducted for the quantitative and the qualitative data Both analyses will follow 4 steps: preparing data, reviewing, analysing and representing it

For the quantitative data, it will be coded following the answer options of the questionnaire, recorded

in a spread sheet on Excel, use statistical tests to check the hypotheses and then represent the

results in tables to provide a better accuracy For the qualitative data, it will be organised and

transcribed to text, develop qualitative codes, group data and look for themes that are related and

present the findings in a text (Saunders, 2016)

After that, the next step will be the integration of both data in order to maximise their strengths and minimise their weaknesses The method for data integration in this research will be Embedding the data In this way, the results on the primary data of the quantitative data of the student answers about their loans will be supplemented by the qualitative responses from the interview with bankers

to elucidate what has happened to the student loans, whether they were affected or not by the political instability

3.3 Sampling - Selecting Respondents

According to Saunders (2007), sample is a “sub-group of all group members or the whole population The sub-group need not necessarily be a subset of people or employees: it can, for example, be a subset of organisations, places or some of the tracks listed for a music CD” The population of interest for the research proposed are bankers responsible for granting student loans and students who receive it Moreover, the students selected are going to be the ones that already had a loan

before 2015 so that they can assess how it has been impacted after the political crisis has started In addition, based on the judgement of the researcher, a sample frame is not possible for this research due to the nature of the survey that would have to include all the roughly 720,000 students who have loans in the country as well as contact all the bankers that provide it (MEC, 2017) In this way, the sampling technique for this proposal will be the non-probability one For this reason, the sample size

of the research will be 2 for the semi-structured interviews and 60 for the questionnaire,

which is according to the standard of minimum non-probability sample size of the guidance table of Saunders (Saunders, 2012) It is important to highlight that an employee from Caixa, another important Brazilian bank, was contacted to be interviewed so that it would be a odd number for the interviews

Accordingly, it will be selected for the interview one employee of Itau, the most important private bank in Brazil, who work in the loans department In addition, one employee of Banco do Brasil, the biggest public bank in Brazil, will participate in interviews as well Moreover, 60 students who already had a loan before 2015 will be asked to participate in a questionnaire, it is a reasonable cross section

to obtain their perspectives The aim is to check if there is any difference of the political instability perception for private and public banks

Furthermore, the employees will be firstly contacted firstly through their e-mail, obtained through telephone contact with the bank branch, to inform about the research and to send to them the information sheet consent form (see Appendix 2) After that, the interview face-to-face will be schedule at their earliest convenience because it is important to establish personal contact in this context Accordingly, the students will be contacted directly in their universities with the information sheet consent form explaining and asking for their participation in the questionnaire that could be answered straight forward

3.6 Research Ethics

The ethical issues that are expected to arise during the dissertation are confidentiality, honesty and consent of participants The first one involves the data of the participants but there will be no names released from the interviews and questionnaires, just the name of the bank/university where the person works/studies The reason for that is to avoid any problem that may happen for them due to the content they will release for the research, especially for the bankers since these institutions are stricter with any kind of data release Second, the data will be presented as it is, no parts will be ignored and it will follow data protection rules Third, it will be given the information sheet before every interview/questionnaire explaining everything about the research and about what would have

to do as well as asking if they are willing to participate, they will be volunteers and know exactly what they are volunteering for (see Appendix 2)

3.7 Limitations of Methodology

There are a few limitations in this proposal that will be attempted to be overcome Firstly, the lack of secondary information for being a very update topic, which can complicate the secondary research Secondly, some people may present very different and contradictory opinion about the theme, which can make it hard to come to a conclusion especially in the qualitative data Thirdly, difficulties in meeting employees of the bank and, therefore, gaining information from them It is not likely to happen but if does, different branches it will be contacted as well as some people that this author personally knows who work in the industry

Furthermore, being an outsider is may be hard to check the data revealed, time constraints of the semester require less time than may be the ideal one for this kind of research Moreover, an inductive approach is difficult to be carried out by new researches since it can lead to a number of different results, which can difficult a conclusion

4 Data Findings

In this chapter it will be described the findings of the primary research that was carried out in this dissertation According to Blumberg, Cooper and Schindler (2011), data analysis is the reducing of the accumulated data gathered from the primary research to a manageable size in order to develop summaries and results

The researcher was able to do one interview with three different bankers in order to obtain more information regarding the effects of the political instability All the three interviews were done face to face, which were allowed to be recorded However, the material should be handled with high confidentiality

4.1 Data from Interviews

In this chapter it will be described the findings of the primary research that was carried out in this dissertation As explained before, three interviews were conducted for the qualitative data

The first one was with a credit analyst at Itau Unibanco in the headquarters of the city Salvador, the biggest and most important private company in Brazil It is also the tenth bank in the world in terms of market value bank in the world biggest financial conglomerate in the Southern Hemisphere

The second one was with an analyst based on the credit department in the headquarters in Salvador of Banco do Brasil, the biggest and most important public bank in Brazil It is the oldest active bank in Brazil, it is controlled by the Brazilian government with its CEO being chosen by the Brazilian president every 4 years It was attempted to also invite an employee of Caixa to be a respondent in this research but just negative responses were received

Quantity

The questions were all the same for all the respondents in order to try to standardize the answers for the qualitative data It were addressed the performance of student loans in the last three years, how they have been impacted by political scandals, if their quantity have been diminished, if the budget for student loans have suffered any change and if there was any modification on existing student loans There were 60 questionnaires sent according to the sample but just 51 answers The interviews were planned to be conducted with 3 employees but just two were successful to be contacted The full transcription of the interviews is available on the appendix of this dissertation

How student loans have performed since 2015?

For this question, the first interviewee stated that the performance of FIES decreased due to a more restricted candidate evaluation and that this did not represent an increase on their other products such

as Pra Valer He believes that most of the students are either being reproved or not taking the loans in those conditions

In addition, the interviewee number 2 stated that the only student loan that Banco do Brasil runs is FIES, which had a slight decrease in comparison to the peak of the program in 2014 However, he highlighted that the credit portfolio of the bank did not present a uniform performance For example, loans for corporate bodies decreased 9.3% whereas individual loans increased 2.7% in 2017

Have student loans been diminished in terms of quantity since 2015?

According to interviewee 1, student loans have decreased 16% in 2017 in comparison to 2016, which

is similar to the average of 12% in the period since 2015 For instance, he explained that the government offered 310,000 loans through FIES last year but 2 out of every 10 loans offered were not taken, even though the total quantity offered was just half of loans offered in 2014 Accordingly, other credit loans are reducing as well at Itau such as the individual loans with 12% less and loans to micro, small and medium companies with 14% less In contrast, credit provision for vehicle purchase increased last year with a small expansion of 3% but which is a sign of recovery of Brazillian borrowers

In addition, Interviewee 2 stated the quantity of student loans also decreased at Banco do Brasil He also reinforced that it is MEC responsibility for approval of the credit provision for students so that they can work with Banco do Brasil, the financial agent, so the bank cannot control closely with the expansion or reduction of the credit He also linked the quantity decrease with the economic moment

of the country

Has the student loan budget suffered any change since 2015?

Interview 1 highlighted firstly that all the budgets suffer annual changes according to the bank necessities and objectives so that the student loan budget had as well He enforced the financial liquidity of the bank with a credit portfolio of R$ 564 billion in 2017 and a net margin profit of 10.7%

of the bank in 2017 but he stated that since the capital resource for private student loans come from saving accounts, which had a reduction since people is making higher withdrawals due to times of crisis, the credit disposal also diminished The current strategy of Itau is to adequate with cost

reductions and a higher doubtful debt control He also pointed out that the default loan percentage of Itau, which is measured by 3 months of outstanding payments, is lower than the Brazilian average

Interviewee 2 explained that the student loans also decreased at Banco do Brasil but that the target of the bank last year was not expand but focus on quality on borrowers Default loans are high and the bank is gaining more profit through currency fees and funding administration, which represent a great reaction to the market downturns They had an increase of 11%, or R$ 6.9 billion on currency fees and

a raise of 26%, or R$ 5.9 billion, on funding administration

Has the approval percentage of payment extension requirements changed since 2015?

According to interviewee 1, the payment extension increased roughly 7% in the period and he linked it

to the level of debt of Brazilian people For instance, he explained the housing policy trough the Minha Casa Minha Vida program, which makes the buyers to pay the house for 25 years and gave it as an example of how high the Brazilian people became in the last decade The interviewee also linked this situation with the fact that the unemployment rate in Brazil is still high due to the economic and politic crisis

Interviewee 2 also stated that more people is struggling even with the payment of the trimestral fee of R$ 150 for the FIES He also highlighted that this is a very low fee that more people cannot pay during this time of crisis He did not mention the precise decrease for the period but stated that better quality loan is still a priority so that the bank cannot provide payment extension for all the requests

How student loans have been impacted by the political instability?

Interviewee 1 believes that student loans in general have been impacted not directly, but indirectly by the political instability He explained that although there were some small changes in the structure of the FIES, it was the economic crisis caused by the political instability which affected student loans the most He highlighted that more students are matching the requirements but decide to not take the loan either due to uncertainty related to the maintenance of their income under the economic crisis condition or due to uncertainty related to the need of having a bachelor degree nowadays

Interviewee 2 agrees that student loans have been affected indirectly by the political instability but he explained that more people are failing to be approved or renew their contract for FIES due to their income reduction This caused more payment extension requests and a decrease on the numbers of student loans He also mentioned as an example that the renew of contracts are presenting some delays due to a detain of MEC workload, which is postponing the contract signatures

4.2 Data from Questionnaires

In this chapter it will be described the findings of the quantitative primary research that was carried out in this dissertation A questionnaire was sent to 60 students who have granted loans before 2015 and that could experience if there was any change when the political instability started 51 respondents answered the questionnaire

Figure 20 Student loans per type in Brazil Source: own, 2018

In the figure above, it is possible to see that the vast majority of respondents were from the FIES, which is according to the findings of the literature view research The percentage in the literature review and the one found in the research are similar

Figure 21 Students who managed to renew their visas Source: own, 2018

On the figure 14 is demonstrated the percentage of people who managed to renew their annual contracts for their student loans The 37.3%, or 19 people out of 51, represents the people who have granted loans for the entire course In the 32 remainder, 17 succeeded to renew their loans while 15 could not do it, which represent a success of 53% of the renewing attempts

Figure 22 Percentage of interest rate change Source: own, 2018

Figure 15 demonstrates the percentage of people whose loan stayed whether the same or not The vast majority had the same interest rate kept This also illustrates the high amount of FIES contracts since they cannot have the interest rate of 3.5% modified Out of the 15 who does not have a FIES according to figure 13 presented before, 7 had the interest rate modified in their contract renew, which represents roughly half of the respondents who have other types of loans

Figure 23 Opinion of students on the political moment Source: own, 2018

The figure 16 above shows that according to the student opinion, the country is passing through an unstable moment The percentage is according to the previous information that the majority of the population sorts as unstable the current moment for the politics in the country according to the content on the literature review